Toronto Dominion Misses Estimates
Toronto Dominion Bank, one of Canada’s largest lenders, reported quarterly earnings that missed analysts’ estimates as expenses and loan losses increased.
Financial Results
The bank reported net income of C$3.4 billion ($2.6 billion) in the third quarter, down from C$3.5 billion a year earlier. That missed the C$3.6 billion average estimate of analysts surveyed by Bloomberg.
Revenue rose to C$10.2 billion from C$9.9 billion a year earlier, while expenses increased to C$6.2 billion from C$5.9 billion.
Loan Losses
The bank set aside C$1.2 billion for loan losses, up from C$921 million a year earlier. The bank said it expects loan losses to remain elevated in the fourth quarter.
“The increase in loan loss provisions reflects the impact of the pandemic on our customers and the economy,” Chief Executive Officer Bharat Masrani said in a statement.
Capital Ratios
The bank’s common equity tier 1 capital ratio, a measure of financial strength, rose to 11.7% from 11.3% a year earlier. The bank said it expects the ratio to remain above 11% in the fourth quarter.
Dividend
The bank maintained its quarterly dividend at C$0.94 a share.
Outlook
The bank said it expects the economic recovery to be “uneven and uncertain” in the near term. It said it is focused on managing costs and maintaining strong capital and liquidity levels.
“We remain focused on managing our business for the long term, while continuing to support our customers and communities through this challenging period,” Masrani said.
Business Segments
The bank’s Canadian retail segment reported net income of C$1.9 billion, down from C$2.1 billion a year earlier. The U.S. retail segment reported net income of C$1.1 billion, down from C$1.2 billion a year earlier.
The bank’s capital markets segment reported net income of C$921 million, up from C$845 million a year earlier. The wealth management segment reported net income of C$367 million, up from C$355 million a year earlier.
Impact of Pandemic
The bank said it has seen an increase in loan losses due to the economic impact of the pandemic. It said it has taken steps to support customers, including deferring loan payments and providing additional credit.
The bank said it has also seen an increase in deposits and a decrease in loan demand. It said it is focused on managing costs and maintaining strong capital and liquidity levels.
Summary
Toronto Dominion Bank reported quarterly earnings that missed analysts’ estimates as expenses and loan losses increased. Revenue rose to C$10.2 billion from C$9.9 billion a year earlier, while expenses increased to C$6.2 billion from C$5.9 billion. The bank set aside C$1.2 billion for loan losses, up from C$921 million a year earlier. The bank maintained its quarterly dividend at C$0.94 a share. The bank said it expects the economic recovery to be “uneven and uncertain” in the near term. It said it is focused on managing costs and maintaining strong capital and liquidity levels. The bank said it has seen an increase in loan losses due to the economic impact of the pandemic and has taken steps to support customers.